<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>ny2305352.txt
<DESCRIPTION>EXHIBIT (H)
<TEXT>
                                                                   Exhibit (h)


                                                                    ST&B Draft
                                                                       10/1/03


                         THE GABELLI EQUITY TRUST INC.

          3,000,000 Shares Series D _____% Cumulative Preferred Stock

                     Liquidation Preference $25 Per Share

         2,000 Shares Series E Auction Rate Cumulative Preferred Stock

                   Liquidation Preference $25,000 Per Share


                            UNDERWRITING AGREEMENT


                                                              October __, 2003

CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH,
        INCORPORATED
GABELLI & COMPANY, INC.

c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Dear Ladies and Gentlemen:

         The Gabelli Equity Trust Inc., a Maryland corporation (the "Fund"),
proposes, upon the terms and conditions set forth herein, to issue and sell an
aggregate of _____ shares (the "Series D Shares") of its Series D ______%
Cumulative Preferred Stock, liquidation preference $25 per share, $0.001 par
value per share (the "Series D Preferred") and an aggregate of _____ shares
(the "Series E Shares" and together with the Series D Shares the "Shares") of
its Series E Auction Rate Cumulative Preferred Stock, liquidation preference
$25,000 per share, $0.001 par value per share (the "Series E Preferred"), to
the several Underwriters named in Schedule I hereto (the "Underwriters"). The
Shares will be authorized by, and subject to the terms and conditions of, the
Articles Supplementary of each of the Series D and Series E shares to be
adopted in connection with the issuance of the Shares (collectively, the
"Articles Supplementary").

         The Fund and its investment adviser, Gabelli Funds, LLC, a New York
limited liability company (the "Adviser"), wish to confirm as follows their
agreement with you in connection with the several purchases of the Shares by
the Underwriters.

         The Fund has entered into an investment advisory agreement with the
Adviser, a custodian agreement with Boston Safe Deposit and Trust Company, a
registrar, transfer agency and dividend reinvestment plan with Equiserve Trust
Company, and an auction agency agreement with The Bank of New York. Such
agreements are hereinafter referred to as the "Investment Advisory Agreement",
the "Custodian Agreement", the "Transfer Agency Agreement" and the "Auction
Agency Agreement", respectively. Collectively, the Investment Advisory
Agreement, the Custodian Agreement, the Transfer Agency Agreement and the
Auction Agency Agreement are hereinafter referred to as the "Fund Agreements".
This Underwriting Agreement is hereinafter referred to as the "Agreement".

         1. Registration Statement and Prospectus. The Fund has prepared in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act")
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and,
together with the 1933 Act Rules and Regulations, the "Rules and Regulations")
a registration statement on Form N-2 (File Nos. 333-106081 and 811-4700) under
the 1933 Act and the 1940 Act (the "registration statement"), including a
prospectus relating to the Shares, and has filed the registration statement
and prospectus in accordance with the 1933 Act and the 1940 Act. The Fund also
has filed a notification of registration of the Fund as an investment company
under the 1940 Act on Form N-8A (the "1940 Act Notification"). The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective under the 1933 Act or, if the registration statement
became effective under the 1933 Act prior to the execution of this Agreement,
as amended or supplemented at the time it became effective, prior to the
execution of this Agreement. If it is contemplated, at the time this Agreement
is executed, that a post-effective amendment to the registration statement
will be filed under the 1933 Act and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said
post-effective amendment. If the Fund has filed an abbreviated registration
statement to register an additional amount of Shares pursuant to Rule 462(b)
under the 1933 Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall include such Rule 462
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus and statement of additional information in the forms included
in the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omits
information in reliance on Rule 430A under the 1933 Act Rules and Regulations
and such information is included in a prospectus and statement of additional
information filed with the Commission pursuant to Rule 497(h) under the 1933
Act Rules and Regulations, the term "Prospectus" as used in this Agreement
means the prospectus and statement of additional information in the form
included in the Registration Statement as supplemented by the addition of the
information contained in the prospectus filed with the Commission pursuant to
Rule 497(h). The term "Prepricing Prospectus" as used in this Agreement means
the prospectus and statement of additional information subject to completion
in the form included in the registration statement at the time of filing of
amendment No. 2 to the registration statement with the Commission on October
1, 2003 and as such prospectus and statement of additional information shall
have been amended from time to time prior to the date of the Prospectus,
together with any other prospectus and statement of additional information
relating to the Fund other than the Prospectus, approved in writing by or
directly or indirectly prepared by the Fund or the Adviser; it being
understood that the definition of Prepricing Prospectus above shall not
include any Prepricing Prospectus prepared by any Underwriter unless approved
in writing by the Fund or Adviser. The terms "Registration Statement",
"Prospectus" and "Prepricing Prospectus" shall also include any financial
statements incorporated by reference therein.

         The Fund has furnished you with copies of such Registration
Statement, each amendment to such Registration Statement filed with the
Commission and each Prepricing Prospectus.

         2. Agreements to Sell and Purchase. The Fund hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund and the Adviser herein contained and subject to all the
terms and conditions set forth herein, each Underwriter agrees, severally and
not jointly, to purchase from the Fund, at a purchase price of [$24.2125] per
Series D Share and a purchase price of [$24,750] per Series E Share, the
number of Shares set forth opposite the name of such Underwriter in Schedule I
hereto.

         3. Terms of Public Offering. The Fund and the Adviser have been
advised by you that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer the Shares upon the terms set forth in the
Prospectus.

         4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Shares shall be made at the office of
Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013,
at 10:00 A.M., New York City time, on October ___, 2003 (the "Closing Date").
The place of closing for the Shares and the Closing Date may be varied by
agreement between you and the Fund.

         Certificates for the Shares shall be registered in such names and in
such denominations as you shall request prior to 9:30 A.M., New York City
time, on the second business day preceding the Closing Date. Such certificates
shall be made available to you in New York City for inspection and packaging
not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date. The certificates evidencing the Shares shall be
delivered to you on the Closing Date against payment of the purchase price
therefor in immediately available funds.

         5. Agreements of the Fund and the Adviser. The Fund and the Adviser,
jointly and severally, agree with the several Underwriters as follows:

         (a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Shares
may commence, the Fund will endeavor to cause the Registration Statement or
such post-effective amendment to become effective under the 1933 Act as soon
as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing when the Registration Statement or such
post-effective amendment has become effective.

         (b) The Fund will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance by the
Commission, the National Association of Securities Dealers, Inc. (the "NASD"),
any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory
or administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus, any Prepricing Prospectus or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940 Act,
of the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding
for any such purposes, (iii) of receipt by the Fund, the Adviser, any
affiliate of the Fund or the Adviser or any representative or attorney of the
Fund or the Adviser of any other material communication from the Commission,
the NASD, any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official relating to the Fund
(if such communication relating to the Fund is received by such person within
three years after the date of this Agreement), the Registration Statement, the
1940 Act Notification, the Prospectus, any Prepricing Prospectus, any sales
material (as hereinafter defined) (or any amendment or supplement to any of
the foregoing), this Agreement or any of the Fund Agreements and (iv) within
the period of time referred to in paragraph (f) below, of any material adverse
change in the condition (financial or other), business, prospects, properties,
net assets or results of operations of the Fund or the Adviser or of the
happening of any event which makes any statement of a material fact made in
the Registration Statement, the Prospectus, any Prepricing Prospectus or any
sales material (as hereinafter defined) (or any amendment or supplement to any
of the foregoing) untrue or which requires the making of any additions to or
changes in the Registration Statement, the Prospectus, any Prepricing
Prospectus or any sales materials (as herein defined) (or any amendment or
supplement to any of the foregoing) in order to state a material fact required
by the 1933 Act, the 1940 Act or the Rules and Regulations to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or of the necessity
to amend or supplement the Registration Statement, the Prospectus, any
Prepricing Prospectus or any sales material (as herein defined) (or any
amendment or supplement to any of the foregoing) to comply with the 1933 Act,
the 1940 Act, the Rules and Regulations or any other law or order of any court
or regulatory body. If at any time the Commission, the NASD, any state
securities commission, any national securities exchange, any arbitrator, any
court or any other governmental, regulatory, self-regulatory or administrative
agency or any official shall issue any order suspending the effectiveness of
the Registration Statement, prohibiting or suspending the use of the
Prospectus or any sales material (as hereinafter defined) (or any amendment or
supplement to any of the foregoing) or suspending the qualification of the
Shares for offering or sale in any jurisdiction, the Fund will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.

         (c) The Fund will furnish to you, without charge, three signed copies
of the registration statement and the 1940 Act Notification as originally
filed with the Commission and of each amendment thereto, including financial
statements and all exhibits thereto and will also furnish to you, without
charge, such number of additional copies of the registration statement and of
each amendment thereto, but without exhibits, as you may request.

         (d) The Fund will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, any
Prepricing Prospectus or any sales material (as hereinafter defined) of which
you shall not previously have been advised or to which you shall object after
being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required by the 1933 Act to be delivered in
connection with sales by any Underwriter or dealer, file any information,
documents or reports pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"), without delivering a copy of such information,
documents or reports to you prior to or concurrently with such filing.

         (e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to you, without charge, in such quantities as you have
requested, copies of the form of the Prepricing Prospectus. The Fund consents
to the use, in accordance with the provisions of the 1933 Act and with the
state securities or blue sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Fund.

         (f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales by any Underwriter or dealer, the Fund will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendments or supplements thereto)
as you may request. The Fund consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the 1933
Act and with the state securities or blue sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
law to be delivered in connection with sales by any Underwriter or dealer. If
during such period of time any event shall occur that in the judgment of the
Fund or in the opinion of counsel for the Underwriters is required to be set
forth in the Registration Statement or the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Registration
Statement or the Prospectus to comply with the 1933 Act, the 1940 Act, the
Rules and Regulations or any other federal law, rule or regulation, or any
state securities or blue sky disclosure laws, rules or regulations, the Fund
will forthwith prepare and, subject to the provisions of paragraph (d) above,
promptly file with the Commission an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Underwriters and dealers,
without charge, a reasonable number of copies thereof. In the event that the
Fund and you agree that the Registration Statement or the Prospectus is to be
amended or supplemented, the Fund, if requested by you, will promptly issue a
press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.

         (g) The Fund and the Adviser will cooperate with you and with counsel
for the Underwriters in connection with the registration or qualification, if
necessary, of the Shares for offering and sale by the several Underwriters and
by dealers under the securities or blue sky laws of such jurisdictions as you
may designate and will file such consents to service of process or other
documents, if any, necessary or appropriate in order to effect such
registration or qualification.

         (h) The Fund will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending not later than 15 months after the effective date of the Registration
Statement, as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 of the 1933 Act Rules and Regulations.

         (i) During the period of five years hereafter, the Fund will furnish
to you (i) as soon as available, a copy of each report of the Fund mailed to
stockholders or filed with the Commission or furnished to the New York Stock
Exchange (the "NYSE") other than reports on Form N-SAR, and (ii) from time to
time such other information concerning the Fund as you may request.

         (j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 11 hereof or by notice given by you terminating
this Agreement pursuant to Section 11 or Section 12 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Fund or the Adviser to comply with the terms or
fulfill any of the conditions of this Agreement required to be complied with
or fulfilled by them, the Fund or, in the case of a failure or refusal by the
Fund, the Adviser, agrees to reimburse you for all out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters) incurred by you
in connection herewith.

         (k) The Fund will apply the net proceeds from the sale of the Shares
in accordance with the description set forth in the Prospectus and in such a
manner as to comply with the investment objectives, policies and restrictions
of the Fund as described in the Prospectus.

         (l) The Fund will timely file the requisite copies of the Prospectus
with the Commission pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act
Rules and Regulations, whichever is applicable or, if applicable, will timely
file the certification permitted by Rule 497(j) of the 1933 Act Rules and
Regulations and will advise you of the time and manner of such filing.

         (m) Except as provided in this Agreement and except to the extent any
hedging activities disclosed in the Prospectus may be considered senior
securities, the Fund will not sell, contract to sell, or otherwise dispose of
any senior securities of the Fund, or grant any options or warrants to
purchase senior securities of the Fund, for a period of 180 days after the
date of the Prospectus, without the prior written consent of Citigroup Global
Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

         (n) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, neither the Fund nor the Adviser has taken, nor
will it take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any securities issued by the Fund to facilitate the sale or
resale of the Shares; it being understood that the Underwriters include
certain affiliates of the Adviser and that stabilization or other activity by
you on behalf of the Underwriters shall not be deemed to be violative of this
representation.

         (o) The Fund will comply in all material respects with all applicable
securities [and other applicable] laws, rules and regulations.

         (p) The Fund will use its best efforts to cause the Series D
Preferred, prior to the Closing Date, to be assigned a rating of Aaa by
Moody's Investors Service, Inc. ("Moody's") and to cause the Series E
Preferred, prior to the Closing Date, to be assigned a rating of Aaa by
Moody's and AAA by Standard Poor's Rating Services ("S&P", and together with
Moody's, the "Rating Agencies").

         (q) The Fund will use its best efforts to have the Series D Shares
listed, subject to notice of issuance, on the NYSE on or before 30 days from
the date hereof.

         (r) The Fund and the Adviser will use their best efforts to perform
all of the agreements required of them and discharge all conditions to closing
as set forth in this Agreement.

         (s) The Fund will furnish to you, on the date on which delivery is
made to the Rating Agencies, the Accountant's Confirmation (as defined in the
Articles Supplementary) corresponding to the Series E Preferred Basic
Maintenance Report (as defined in the Articles Supplementary) for the first
Valuation Date (as defined in the Articles Supplementary) following the
Closing Date.

         6. Representations and Warranties of the Fund and the Adviser. The
Fund and the Adviser, jointly and severally, represent and warrant to each
Underwriter that:

         (a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations,
complied when so filed in all material respects with the provisions of the
1933 Act, the 1940 Act and the Rules and Regulations. The Commission has not
issued any order preventing or suspending the use of any Prepricing
Prospectus.

         (b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any amendment
or supplement thereto when filed with the Commission under Rule 497 of the
1933 Act Rules and Regulations and the 1940 Act Notification when originally
filed with the Commission and any amendment or supplement thereto when filed
with the Commission, complied or will comply in all material respects with the
provisions of the 1933 Act, the 1940 Act and the Rules and Regulations and did
not or will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Fund in writing by or on behalf of any
Underwriter through you expressly for use therein.

         (c) All the outstanding shares of capital stock of the Fund have been
duly authorized and validly issued, are fully paid and nonassessable and are
free of any preemptive or similar rights; the Shares have been duly authorized
and, when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform to
the description thereof in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them). The capital stock of the Fund
conforms to the description thereof in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them).

         (d) The Fund is a corporation duly organized and validly existing in
good standing under the laws of the State of Maryland, with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus
(and any amendment or supplement to either of them), and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Fund. The Fund has no subsidiaries.

         (e) There are no legal or governmental proceedings pending or
threatened, against the Fund, or to which the Fund or any of its properties is
subject, that are required to be described in the Registration Statement or
the Prospectus (and any amendment or supplement to either of them) but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) or to be filed as an exhibit to the Registration Statement
that are not described or filed as required by the 1933 Act, the 1940 Act or
the Rules and Regulations.

         (f) The Fund is not in violation of its articles of incorporation or
by-laws, or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the Fund or of
any decree of the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court or governmental
agency, body or official having jurisdiction over the Fund, or in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any contract required to be included as an exhibit to the
Registration Statement (each, a "Material Fund Agreement").

         (g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by the
Fund, nor the consummation by the Fund of the transactions contemplated hereby
or thereby (A) requires any consent, approval, authorization or other order of
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may have been obtained prior to the date hereof and
such as may be required for compliance with the state securities or blue sky
laws of various jurisdictions which have been or will be effected in
accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the articles
of incorporation, including the Articles Supplementary, or by-laws, or other
organizational documents, of the Fund or (B) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Fund is a party
or by which it or any of its properties may be bound, or violates or will
violate any statute, law, regulation or filing or judgment, injunction, order
or decree applicable to the Fund or any of its properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Fund pursuant to the terms of any agreement or
instrument to which it is a party or by which it may be bound or to which any
of its property or assets is subject. The Fund is not subject to any order of
any court or of any arbitrator, governmental authority or administrative
agency.

         (h) The accountants, PricewaterhouseCoopers LLP, who have audited and
certified or shall audit and certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (or
any amendment or supplement to either of them) are independent public
accountants as required by the 1933 Act, the 1940 Act and the Rules and
Regulations.

         (i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position, results of operations and changes in financial
position of the Fund on the basis stated or incorporated by reference in the
Registration Statement and the Prospectus at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and
data included in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them) are accurately presented and
prepared on a basis consistent with such financial statements and the books
and records of the Fund.

         (j) The execution and delivery of, and the performance by the Fund of
its obligations under, this Agreement and the Fund Agreements have been duly
and validly authorized by the Fund, and this Agreement and the Fund Agreements
have been duly executed and delivered by the Fund and constitute the valid and
legally binding agreements of the Fund, enforceable against the Fund in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws.

         (k) Except as disclosed in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), subsequent to
the respective dates as of which such information is given in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them), the Fund has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Fund, and there has not been any change in
the capital stock, or material increase in the short-term debt or long-term
debt, of the Fund, or any material adverse change, or any development
involving or which may reasonably be expected to involve, a prospective
material adverse change, in the condition (financial or other), business,
prospects, properties, net assets or results of operations of the Fund,
whether or not arising in the ordinary course of business, it being understood
that a change of up to 15% of the aggregate market value of the Fund's assets
shall not cause this representation to be untrue.

         (l) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the 1933
Act, the 1940 Act or the Rules and Regulations.

         (m) The Fund has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; the Fund has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the Fund under any such permit, subject
in each case to such qualification as may be set forth in the Prospectus (and
any amendment or supplement thereto); and, except as described in the
Prospectus (and any amendment or supplement thereto), none of such permits
contains any restriction that is materially burdensome to the Fund.

         (n) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization and with the investment policies and restrictions of the Fund
and with the applicable requirements of the 1940 Act, the 1940 Act Rules and
Regulations and the Internal Revenue Code of 1986, as amended (the "Code");
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles, to
calculate net asset value, and to maintain accountability for assets and to
maintain compliance with the books and records requirements under the 1940 Act
and the 1940 Act Rules and Regulations; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

         (o) To the Fund's knowledge, except as disclosed in the Prospectus,
neither the Fund nor any employee or agent of the Fund has made any payment of
funds of the Fund or received or retained any funds, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectus.

         (p) The Fund has filed all tax returns required to be filed, which
returns are complete and correct, and the Fund is not in material default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.

         (q) No holder of any security of the Fund has any right to require
registration of any shares of capital stock or any other security of the Fund
because of the filing of the Registration Statement or consummation of the
transactions contemplated by this Agreement.

         (r) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
Rules and Regulations, has taken all required action under the 1933 Act, the
1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.

         (s) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of any
patents, patent licenses, trademarks, service marks or trade names which it
does not own, possess or license.

         (t) The Fund is duly registered under the 1940 Act as a closed-end
non-diversified management investment company and the 1940 Act Notification
has been duly filed with the Commission and, at the time of filing thereof and
any amendment or supplement thereto, conformed in all material respects with
all applicable provisions of the 1940 Act and the Rules and Regulations. The
Fund is, and at all times through the completion of the transactions
contemplated hereby, will be, in compliance in all material respects with the
terms and conditions of the 1933 Act and the 1940 Act. No person is serving or
acting as an officer, director or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the 1940 Act Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and the rules and regulations of the Commission promulgated under the
Advisers Act (the "Advisers Act Rules and Regulations").

         (u) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of
any securities issued by the Fund to facilitate the sale or resale of the
Shares, and the Fund is not aware of any such action taken or to be taken by
any affiliates of the Fund.

         (v) The Fund has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations;
and none of such documents or reports contained an untrue statement of any
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.

         (w) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and "road
show scripts"), whether in printed or electronic form, authorized in writing
by or prepared by the Fund or the Adviser for use in connection with the
offering and sale of the Shares (collectively, "sales material") complied and
comply in all material respects with the applicable requirements of the 1933
Act, the 1940 Act, the Rules and Regulations and the rules and interpretations
of the NASD and no such sales material contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

         (x) The Fund's registration statement on Form 8-A with respect to the
Series D Preferred, under the 1934 Act, has been timely filed pursuant to the
1934 Rules and Regulations.

         (y) Neither the Fund nor, to the knowledge of the Fund, any director,
officer, agent, employee or affiliate of the Fund is aware of or has taken any
action, directly or indirectly, that would result in a violation by such
persons of the FCPA, including, without limitation, making use of the mails or
any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any "foreign official" (as such term is defined
in the FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the FCPA and the
Fund, and, to the knowledge of the Fund, its affiliates have conducted their
businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected
to continue to ensure, continued compliance therewith.

         "FCPA" means Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder.

         (z) There is and has been no failure on the part of the Fund and any
of the Fund's directors or officers, in their capacities as such, to comply
with any provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Sarbanes-Oxley Act"),
including Sections 302 and 906 related to certifications.

         (aa) [The operations of the Fund are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting
requirements of The Bank Secrecy Act of 1970, as amended (including amendments
pursuant to the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001), the money laundering statutes of all jurisdictions,
the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Fund with respect to the Money Laundering
Laws is pending or, to the best knowledge of the Fund, threatened.]

         (bb) Neither the Fund nor, to the knowledge of the Fund, any
director, officer, agent, employee or affiliate of the Fund is currently on
the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC")
list of specially designated nationals and blocked persons; and the Fund will
not willfully directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.

         (cc) Each of the Fund Agreements and the Fund's and the Adviser's
obligations under this Agreement and each of the Fund Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the 1940 Act
Rules and Regulations, the Advisers Act the Advisers Act Rules and
Regulations.

         (dd) At all times since its inception, as required by Subchapter M of
the Code, the Fund has complied with the requirements to qualify as a
regulated investment company under the Code.

         (ee) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no director of
the Fund is an "interested person" (as defined in the 1940 Act) of the Fund or
an "affiliated person" (as defined in the 1940 Act) of any Underwriter.

         (ff) The Fund has no liability for borrowed money, including under
any reverse repurchase agreement.

         7. Representations and Warranties of the Adviser. The Adviser
represents and warrants to each Underwriter as follows:

         (a) The Adviser is a limited liability company duly organized and
validly existing in good standing under the laws of the State of New York,
with full limited liability company power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement to
either of them), and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or to qualify does not
have a material adverse effect on the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Adviser and its subsidiaries, taken as a whole, or on the ability of the
Adviser to perform its obligations under this Agreement and the Investment
Advisory Agreement.

         (b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940
Act Rules and Regulations from acting under the Investment Advisory Agreement
for the Fund as contemplated by the Prospectus (or any amendment or supplement
thereto). There does not exist any proceeding or any facts or circumstances
the existence of which could lead to any proceeding which might adversely
affect the registration of the Adviser with the Commission.

         (c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its properties is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them) but are not described as required or that may
reasonably be expected to involve a prospective material adverse change, in
the condition (financial or other), business, prospects, properties, net
assets or results of operations of the Adviser and its subsidiaries, taken as
a whole, or on the ability of the Adviser to perform its obligations under
this Agreement and the Investment Advisory Agreement.

         (d) Neither the execution, delivery or performance of this Agreement
or the Investment Advisory Agreement by the Adviser, nor the consummation by
the Adviser of the transactions contemplated hereby or thereby (A) requires
the Adviser to obtain any consent, approval, authorization or other order of
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official or conflicts or will conflict with or constitutes or will constitute
a breach of or a default under the certificate of incorporation or by-laws, or
other organizational documents of the Adviser or (B) conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, any agreement, indenture, lease or other instrument to which the
Adviser is a party or by which it or any of its properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Adviser or any of its properties
or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Adviser pursuant to the terms
of any agreement or instrument to which it is a party or by which it may be
bound or to which any of the property or assets of the Adviser is subject. The
Adviser is not subject to any order of any court or of any arbitrator,
governmental authority or administrative agency except for (a) an Order of the
Securities and Exchange Commission, dated August 17, 1988 and (b) an Order of
the Federal Communications Commission, dated August 21, 1992.

         (e) The execution and delivery of, and the performance by the Adviser
of its obligations under, this Agreement and the Investment Advisory Agreement
have been duly and validly authorized by the Adviser, and this Agreement and
the Investment Advisory Agreement have been duly executed and delivered by the
Adviser and each constitutes the valid and legally binding agreement of the
Adviser, enforceable against the Adviser in accordance with its terms except
as rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.

         (f) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus (or any amendment or supplement thereto) and under this Agreement
and the Investment Advisory Agreement.

         (g) The description of the Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) complied and comply
in all material respects with the provisions the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

         (h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to
the respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of
them), the Adviser has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Adviser and its subsidiaries, taken as a
whole, and that is required to be disclosed in the Registration Statement or
in the Prospectus and there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Adviser and its subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, or which, in each case, could have a material
adverse effect on the ability of the Adviser to perform its obligations under
this Agreement and the Investment Advisory Agreement.

         (i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto); the
Adviser has fulfilled and performed all its material obligations with respect
to such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the Adviser under any such permit;
and, except as described in the Prospectus (and any amendment or supplement
thereto), none of such permits contains any restriction that is materially
burdensome to the Adviser.

         (j) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), the Adviser has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, stabilization or manipulation of the price
of any securities issued by the Fund to facilitate the sale or resale of the
Shares, and the Adviser is not aware of any such action taken or to be taken
by any affiliates of the Adviser; it being understood that the Underwriters
include certain affiliates of the Adviser and that stabilization or other
activity by you shall not be deemed to be violative of this representation.

         (k) Mario J. Gabelli is the validly appointed Chief Investment
Officer of the Adviser and the portfolio manager of the Fund; Mr. Gabelli has
not given notice nor made known an intention to give notice of termination of
his employment and the Adviser knows of no reason why Mr. Gabelli should be
unable to serve as portfolio manager to the Fund.

         (l) In the event that the Fund or the Adviser makes available any
promotional materials intended for use only by qualified broker-dealers and
registered representatives thereof by means of a proprietary Internet web site
administered by such party or similar electronic means, the Fund or the
Adviser will install and maintain pre-qualification and password- protection
or similar procedures which are reasonably designed to restrict access to such
promotional materials by persons other than qualified broker-dealers and
representatives thereof.

         (m) The Adviser is not in violation of its articles of organization,
by-laws or other organizational documents or in default under any agreement,
indenture or instrument, where such violation or default would reasonably be
expected to have a material adverse effect on the ability of the Adviser to
function as an investment adviser or perform its obligations under the
Investment Advisory Agreement.

         8. Indemnification and Contribution.

         (a) The Fund and the Adviser, jointly and severally, agree to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, any Prepricing Prospectus, any sales
material (or any amendment or supplement to any of the foregoing), or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to such Underwriter furnished in writing to the Fund by
or on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a
copy of the Prospectus shall not have been delivered or sent to such person
within the time required by the 1933 Act and the 1933 Act Rules and
Regulations, and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in such Prepricing Prospectus
was corrected in the Prospectus, provided that the Fund has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Fund or the Adviser may otherwise have.

         (b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund or the Adviser, such Underwriter or
such controlling person shall promptly notify the Fund or the Adviser, and the
Fund or the Adviser shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter
or such controlling person unless (i) the Fund or the Adviser has agreed in
writing to pay such fees and expenses, (ii) the Fund and the Adviser have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Fund or the Adviser
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Fund or the
Adviser by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing interests
between them (in which case the Fund and the Adviser shall not have the right
to assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that the
Fund and the Adviser shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of only one separate firm of attorneys (in addition to any local counsel) at
any time for all such Underwriters and controlling persons not having actual
or potential differing interests with you or among themselves, which firm
shall be designated in writing by Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, and that all such fees and
expenses shall be reimbursed as they are incurred. The Fund and the Adviser
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the Fund and the Adviser agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding paragraph,
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.

         (c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund and the Adviser, their directors, any officers who
sign the Registration Statement, and any person who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, to the same extent as the foregoing indemnity from the Fund and the
Adviser to each Underwriter, but only with respect to information relating to
such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Fund or the Adviser,
any of their directors, any such officer, or any such controlling person based
on the Registration Statement, the Prospectus or any Prepricing Prospectus, or
any amendment or supplement thereto, and in respect of which indemnity may be
sought against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the Fund and the Adviser
by paragraph (b) above (except that if the Fund or the Adviser shall have
assumed the defense thereof such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Fund and the Adviser, their directors, any
such officer, and any such controlling person shall have the rights and duties
given to the Underwriters by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Underwriters may
otherwise have.

         (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Fund and the Adviser on the one hand (treated jointly for this purpose
as one person) and the Underwriters on the other hand from the offering of the
Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Fund and the Adviser on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Fund and the
Adviser on the one hand (treated jointly for this purpose as one person) and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Fund bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault of the Fund and the Adviser on the one
hand (treated jointly for this purpose as one person) and the Underwriters on
the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Fund and the Adviser on the one hand (treated jointly for this
purpose as one person) or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

         (e) The Fund, the Adviser and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
[(except as may be provided in any agreement among underwriters relating to the
offering of the Securities) shall be required to contribute any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder.] No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to the respective numbers
of Shares set forth opposite their names in Schedule I hereto and not joint.

         (f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.

         (g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Fund and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Fund, the Adviser, their directors or
officers, or any person controlling the Fund or the Adviser, (ii) acceptance
of any Shares and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Fund, the Adviser, their directors or officers, or any
person controlling the Fund or the Adviser, shall be entitled to the benefits
of the indemnity, contribution, and reimbursement agreements contained in this
Section 8.

         9. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Shares hereunder are subject to the
following conditions:

         (a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and
all filings, if any, required by Rules 497 and 430A under the 1933 Act and the
1933 Act Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or order pursuant
to Section 8(e) of the 1940 Act shall have been issued and no proceeding for
those purposes shall have been instituted or, to the knowledge of the Fund,
the Adviser or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the
Registration Statement or the prospectus or otherwise) shall have been
complied with to your satisfaction.

         (b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change (other than a change of up to 15% of the
aggregate market value of the Fund's assets) or any development involving a
prospective change, in or affecting the condition (financial or other),
business, prospects, properties, net assets, or results of operations of the
Fund or the Adviser and its subsidiaries, taken as a whole, not contemplated
by the Prospectus, which in your opinion would materially, adversely affect
the market for the Shares , or (ii) any event or development relating to or
involving the Fund or the Adviser or any officer or director of the Fund or
the Adviser which makes any statement made in the Prospectus untrue or which,
in the opinion of the Fund and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations or any other law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in
your opinion materially adversely affect the market for the Shares.

         (c) The Fund shall have furnished to you a report showing compliance
with the asset coverage requirements of the 1940 Act and a Series E Preferred
Basic Maintenance Report (as defined in the Articles Supplementary), each
dated the Closing Date and in form and substance satisfactory to you. Each
such report may use portfolio holdings and valuations as of the close of
business of any day not more than the six business days preceding the Closing
Date; provided, however, that the Fund represents in such report that its
total net assets as of the Closing Date have not declined by 5% or more from
such valuation date.

         (d) You shall have received on the Closing Date, an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Fund, dated the
Closing Date and addressed to you, to the effect that:

                  (i) The Fund is duly registered and qualified to conduct its
         business and is in good standing in the State of New York (which is
         the only jurisdiction identified by management of the Fund to such
         counsel in which the Fund owns property, has operations or conducts
         business);

                  (ii) The authorized and outstanding capital stock of the
         Fund is as set forth under the caption "Capitalization" in the
         Prospectus; and the authorized capital stock of the Fund (including
         each of the Series D Preferred and Series E Preferred) conforms in
         all material respects as to legal matters to the description thereof
         contained in the Prospectus under the captions "Description of
         Capital Stock and Other Securities", "Description of the Series D
         Preferred and Series E Preferred" and "The Auction";

                  (iii) To the extent the due authorization and valid issuance
         of the Shares is dependent upon the Fund having the authority to
         issue such Shares under Section 8(b)(1)(C) or Section 13(a)(2) of the
         1940 Act, based on our review of the Fund's proxy statements dated
         April 3, 1997 and April 29, 1998 and the results of the meetings of
         stockholders referred to therein, the Fund has such authority;

                  (iv) Such counsel has been orally advised that the
         Registration Statement has become effective under the 1933 Act and,
         to the best knowledge of such counsel after reasonable inquiry, no
         stop order suspending the effectiveness of the Registration Statement
         or order pursuant to Section 8(e) of the 1940 Act has been issued and
         no proceedings for that purpose are pending before or contemplated by
         the Commission; and any required filing of the Prospectus pursuant to
         Rule 497 has been made in accordance with Rule 497;

                  (v) Each of this Agreement and the Fund Agreements has been
         duly executed and delivered by the Fund and is a valid, legal and
         binding agreement of the Fund, enforceable against the Fund in
         accordance with its terms, except to the extent that (A) enforcement
         hereof and thereof may be limited by (i) bankruptcy, insolvency,
         reorganization, moratorium or other similar laws now or hereafter in
         effect relating to creditors' rights generally, or (ii) general
         principles of equity (regardless of whether enforceability is
         considered in a proceeding at law or in equity) and (B) enforcement
         of rights to indemnity and contribution hereunder and thereunder may
         be limited by Federal or state securities laws or principles of
         public policy;

                  (vi) Neither the offer, sale or delivery of the Shares, the
         execution, delivery or performance of this Agreement and the Fund
         Agreements by the Fund, compliance by the Fund with the provisions
         hereof or thereof nor consummation by the Fund of the transactions
         contemplated hereby or thereby conflicts or will conflict with or
         constitutes or will constitute a breach of, or a default under any
         Material Fund Agreement, or will result in the creation or imposition
         of any lien, charge or encumbrance upon any property or assets of the
         Fund under any Material Fund Agreement, nor will any such action
         result in any violation of (a) any provision of the New York Business
         Corporation Law and those laws, rules and regulations of the State of
         New York and the United States of America that, in the experience of
         such counsel, are normally applicable to entities such as the Fund
         and transactions of the type contemplated by this Agreement, but
         without having made any special investigation concerning any other
         laws, rules or regulations (collectively, "Applicable Fund Laws");
         provided, that the term "Applicable Fund Laws" does not include (1)
         the rules and regulations of the NASD, (2) any federal or state
         securities or blue sky laws, (3) any antifraud laws or (4) any law,
         rule or regulation that may have become applicable to the Fund as a
         result of the Underwriters' involvement with the transactions
         contemplated hereby or because of any facts specifically pertaining
         to the Underwriters, or (b) any judgment, order or decree of any New
         York or federal executive, legislative, judicial, administrative or
         regulatory body under Applicable Fund Laws and the NYSE (each, a
         "Governmental Fund Authority") identified in an officer's
         certificate;

                  (vii) No consent, approval, license, authorization, order or
         validation of, or filing, recording or registration with, any
         Governmental Fund Authority pursuant to Applicable Fund Laws (each, a
         "Governmental Fund Approval") is required for the valid issuance and
         sale of the Shares to the Underwriters or the execution, delivery and
         performance by the Fund of this Agreement and the Fund Agreements or
         the consummation of the transactions contemplated hereby and thereby
         except such Governmental Fund Approvals as have been obtained;

                  (viii) The 1940 Act Notification, the Registration
         Statement, the Prospectus (except for the financial statements and
         the notes thereto and the schedules and other financial and
         statistical data included therein, as to which such counsel need not
         express any opinion) comply as to form in all material respects with
         the requirements of the 1933 Act, the 1940 Act, the Rules and
         Regulations, the 1934 Act and the rules and regulations promulgated
         thereunder;

                  (ix) To the actual knowledge of such counsel after
         reasonable inquiry, other than as described or contemplated in the
         Registration Statement or Prospectus (or any supplement thereto),
         there are (A) no legal or governmental proceedings in the State of
         New York or, to the actual knowledge of such counsel, any other
         state, pending or threatened against the Fund, or to which the Fund
         or any of its properties is subject, which are required to be
         described in the Registration Statement or Prospectus (or any
         amendment or supplement to either of them) that are not described as
         required and (B) no agreements, contracts, indentures, leases or
         other instruments that are required to be described in the
         Registration Statement or the Prospectus (or any amendment or
         supplement to either of them) or to be filed as an exhibit to the
         Registration Statement, that are not described or filed as required,
         as the case may be;

                  (x) The statements in the Registration Statement, Prospectus
         and statement of additional information under the caption "Taxation",
         insofar as they refer to statements of law or legal conclusions, are
         accurate and present fairly the information required to be shown;

                  (xi) Each of the Fund Agreements and the Fund's and the
         Adviser's obligations under each of this Agreement and the Fund
         Agreements comply as to form in all material respects with all
         applicable provisions of the 1933 Act, the 1940 Act, the Advisers
         Act, the Rules and Regulations and the Advisers Act Rules and
         Regulations;

                  (xii) The Fund is duly registered with the Commission under
         the 1940 Act as a closed-end non-diversified management investment
         company; and the provisions of the Fund's articles of incorporation,
         including the Articles Supplementary, and by-laws, and the investment
         policies and restrictions described in the Registration Statement and
         the Prospectus under the captions "The Fund", "Investment Objectives
         and Policies", "Risk Factors and Special Considerations" and
         "Investment Restrictions" (in the statement of additional
         information) comply in all material respects with the requirements of
         the 1940 Act, and all action has been taken by the Fund as is
         required of the Fund by the 1933 Act and the 1940 Act and the Rules
         and Regulations in connection with the issuance and sale of the
         Shares to make the public offering and consummate the sale of the
         Shares as contemplated by this Agreement;

                  (xiii) The Fund has all necessary governmental
         authorizations, approvals, orders, licenses, certificates, franchises
         and permits of and from all governmental regulatory officials and
         bodies required under Applicable Fund Law (except where the failure
         so to have any such authorizations, approvals, orders, licenses,
         certificates, franchises or permits, individually or in the
         aggregate, would not have a material adverse effect on the business,
         properties, operations or financial condition of the Fund), to own
         its properties and to conduct business, as described in the
         Prospectus;

                  (xiv) To the actual knowledge of such counsel after
         reasonable inquiry, except as described in the Prospectus, there is
         no holder of any security of the Fund or any other person who has the
         right, contractual or otherwise pursuant to any Material Fund
         Agreement, to cause the Fund to sell or otherwise issue to them, or
         to permit them to underwrite the sale of, the Shares or the right to
         have any securities of the Fund included in the registration
         statement or the right, as a result of the filing of the registration
         statement, to require registration under the 1933 Act of any
         securities of the Fund;

                  (xv) If the Fund operates as described in the Prospectus,
         the Fund will qualify as a regulated investment company under the
         Code; and

                  (xvi) Such counsel shall also state that they have
         participated in conferences with officers and employees of the Fund,
         representatives of the independent accountants for the Fund, Maryland
         counsel to the Fund, the Underwriters and counsel for the
         Underwriters at which the contents of the Registration Statement and
         the Prospectus and related matters were discussed and, although they
         are not passing upon, and do not assume any responsibility for, the
         accuracy, completeness or fairness of the statements contained in the
         Registration Statement or the Prospectus except to the limited extent
         otherwise covered by paragraphs (ii), (ix), (x) and (xii), and have
         made no independent check or verification thereof, on the basis of
         the foregoing, no facts have come to their attention that would have
         led them to believe that the Registration Statement or any amendment
         or supplement thereto, at the time it became effective, contained an
         untrue statement of a material fact or omitted to state any material
         fact required to be stated therein or necessary to make the
         statements contained therein not misleading or that the Prospectus or
         any amendment or supplement thereto, as of its issue date and as of
         the Closing Date, contained or contains an untrue statement of a
         material fact or omitted or omits to state a material fact required
         to be stated therein or necessary to make the statements contained
         therein, in light of the circumstances under which they were made,
         not misleading, except that they express no belief with respect to
         the financial statements, schedules and other financial information
         and statistical data included therein or excluded therefrom or the
         exhibits to the Registration Statement.

         (e) You shall have received on the Closing Date, an opinion of Miles
& Stockbridge P.C., Maryland counsel for the Fund, dated the Closing Date and
addressed to you, to the effect that:

                  (i) The Fund is a corporation duly incorporated, validly
         existing and in good standing under the laws of the State of Maryland
         with full corporate power to own, lease and operate its properties
         and to conduct its business as described in the Registration
         Statement and the Prospectus (and any amendment or supplement to
         either of them);

                  (ii) The authorized capital stock of the Fund is as set
         forth under the caption "Capitalization" in the Prospectus; and the
         authorized capital stock of the Fund conforms in all material
         respects as to legal matters to the description thereof contained in
         the Prospectus under the caption "Description of Capital Stock and
         Other Securities";

                  (iii) The Shares have been duly authorized and, when issued
         and delivered to the Underwriters against payment therefor in
         accordance with the terms hereof, will be validly issued, fully paid
         and nonassessable. The issuance of the Shares will not be subject to
         preemptive or other similar rights entitling any person to purchase
         or acquire any of the Shares upon the issuance thereof by the Fund
         which arise by operation of the laws of the State of Maryland or
         under the articles of incorporation or by-laws of the Fund;

                  (iv) The Shares conform in all material respects to the
         description thereof contained in the Prospectus under the caption
         "Description of the Series D Preferred and Series E Preferred" and
         "The Auction";

                  (v) The form of certificates for the Shares conforms to the
         requirements of the Maryland General Corporation Law;

                  (vi) The Fund has the requisite corporate power and
         authority to enter into and execute and deliver this Agreement and to
         issue, sell and deliver the Shares to the Underwriters as provided
         for herein;

                  (vii) This Agreement has been duly authorized by the Fund.
         Neither the offer, sale or delivery of the Shares, the execution,
         delivery or performance of this Agreement by the Fund, compliance by
         the Fund with the provisions hereof nor consummation by the Fund of
         the transactions contemplated hereby conflicts or will conflict with
         or constitutes or will constitute a breach of, or a default under,
         the articles of incorporation, including the Articles Supplementary,
         or by-laws of the Fund;

                  (viii) The Fund has full corporate power and to the
         knowledge of such counsel, all governmental authorizations,
         approvals, orders, licenses, certificates, franchises and permits
         necessary or required under the laws of the State of Maryland for the
         Fund to own its properties and to conduct its business as it now is
         being conducted as described in the Prospectus (except in cases where
         the failure so to have any such authorizations, approvals, orders,
         licenses, certificates, franchises or permits, individually or in the
         aggregate, would not have a material adverse effect on the business,
         properties, operations or financial conditions of the Fund); and

                  (ix) No consent, approval, authorization or other order of,
         or registration or filing with, any securities commission, court,
         regulatory body, administrative agency or other governmental body,
         agency, or official of the State of Maryland is required on the part
         of the Fund for the valid issuance and sale of the Shares to the
         Underwriters as contemplated by this Agreement, the execution and
         delivery by the Fund of this Agreement and the performance by the
         Fund of its obligations hereunder or the consummation of the
         transactions contemplated hereby by the Fund, except those as may be
         required under the securities or blue sky laws of the State of
         Maryland; it being understood that such counsel do not express any
         opinion as to any such consent, approval, authorization or other
         order of, or registration or filing, which may be required as a
         result of the involvement of any other parties to this Agreement.

         (f) You shall have received on the Closing Date an opinion of James
E. McKee, general counsel for the Adviser, dated the Closing Date and
addressed to you, to the effect that:

                  (i) The Fund is not in violation of its articles of
         incorporation, including the Articles Supplementary, or by-laws and,
         to the actual knowledge of such counsel after reasonable inquiry, is
         not in default in the performance of any material obligation,
         agreement or condition in any bond, debenture, note or other evidence
         of indebtedness, except as may be disclosed in the Prospectus;

                  (ii) The Fund is not in violation of any Material Fund
         Agreement; and

                  (iii) To the actual knowledge of such counsel after
         reasonable inquiry, the Fund is not in violation of (A) any provision
         of the New York Business Corporation Law and those laws, rules and
         regulations of the State of New York and the United States of America
         that, in the experience of such counsel, are normally applicable to
         entities such as the Fund and transactions of the type contemplated
         by this Agreement, but without having made any special investigation
         concerning any other laws, rules or regulations; provided, that such
         laws, rules and regulations do not include (1) the rules and
         regulations of the NASD, (2) any federal or state securities or blue
         sky laws other than the 1933 Act, the 1934 Act and the 1940 Act and
         the rules and regulations thereunder to the extent not excluded by
         item (3) below, (3) any antifraud laws under the 1933 Act or the 1934
         Act as they apply to the Prospectus and the Registration Statement or
         (4) any law, rule or regulation that may have become applicable to
         the Fund as a result of the Underwriters' involvement with the
         transactions contemplated by this Agreement or because of any facts
         specifically pertaining to the Underwriters or (B) any order,
         judgment or decree of any New York or federal executive, legislative,
         judicial, administrative or regulatory body under the laws, rules and
         regulations referred to in clause (A) of this paragraph and the NYSE.

         (g) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the Adviser,
dated the Closing Date and addressed to you, to the effect that:

                  (i) The Adviser is a limited liability company duly
         organized and validly existing in good standing under the laws of the
         State of New York with full limited liability company power and
         authority to own, lease and operate its properties and to conduct its
         business as described in the Registration Statement and the
         Prospectus (and any amendment or supplement to either of them), it
         being understood that the opinion with respect to good standing is
         based solely upon such counsel's review of a certificate of the
         Secretary of State and a telephonic confirmation;

                  (ii) The Adviser is duly registered with the Commission as
         an investment adviser under the Advisers Act and is not prohibited by
         the Advisers Act, the Advisers Act Rules and Regulations, the 1940
         Act or the 1940 Act Rules and Regulations from acting under the
         Investment Advisory Agreement for the Fund as contemplated by the
         Prospectus (or any amendment or supplement thereto).

                  (iii) The Adviser has limited liability company power and
         authority to enter into this Agreement and the Investment Advisory
         Agreement, and this Agreement and the Investment Advisory Agreement
         have been duly authorized, executed and delivered by the Adviser and
         each is a valid, legal and binding agreement of the Adviser,
         enforceable against the Adviser in accordance with its terms except
         to the extent that (A) enforcement hereof and thereof may be limited
         by (i) bankruptcy, insolvency, reorganization, moratorium or other
         similar laws now or hereafter in effect relating to creditors' rights
         generally, or (ii) general principles of equity (regardless of
         whether enforceability is considered in a proceeding at law or in
         equity) and (B) enforcement of rights to indemnity and contribution
         hereunder and thereunder may be limited by Federal or state
         securities laws or principles of public policy;

                  (iv) Neither the execution, delivery or performance of this
         Agreement or the Investment Advisory Agreement by the Adviser,
         compliance by the Adviser with the provisions hereof or thereof nor
         consummation by the Adviser of the transactions contemplated hereby
         or thereby conflicts or will conflict with, or constitutes or will
         constitute a breach of or default under, the certificate of
         incorporation or by-laws, or other organizational documents, of the
         Adviser or any contract or agreement to which the Adviser is a party
         which has been identified to such counsel by the Adviser as material
         or as one which could have an effect on the types of transactions
         contemplated by this Agreement (each, an "Material Adviser
         Agreement"), or will result in the creation or imposition of any
         lien, charge or encumbrance upon any property or assets of the
         Adviser under any Material Adviser Agreement, nor will any such
         action result in any violation of any provision of the New York
         Business Corporation Law and those laws, rules and regulations of the
         State of New York and the United States of America that, in the
         experience of such counsel, are normally applicable to entities such
         as the Adviser and transactions of the type contemplated by this
         Agreement, but without having made any special investigation
         concerning any other laws, rules or regulations (collectively,
         "Applicable Adviser Laws"); provided, that the term "Applicable
         Adviser Laws" does not include (1) the rules and regulations of the
         NASD, (2) any federal or state securities or blue sky laws, (3) any
         antifraud laws or (4) any law, rule or regulation that may have
         become applicable to the Adviser as a result of the Underwriters'
         involvement with the transactions contemplated hereby or because of
         any facts specifically pertaining to the Underwriters;

                  (v) No consent, approval, license, authorization or
         validation of, or filing, recording or registration with, any New
         York or federal executive, legislative, judicial, administrative or
         regulatory body under Applicable Adviser Laws (each, a "Governmental
         Adviser Approval") is required on the part of the Adviser for the
         execution, delivery and performance by it of this Agreement and the
         Investment Advisory Agreement to which it is a party or the
         consummation by it of the transactions contemplated hereby and
         thereby except such Governmental Adviser Approvals as have been
         obtained;

                  (vi) To the actual knowledge of such counsel after
         reasonable inquiry, there are no legal or governmental proceedings
         pending or threatened against the Adviser or to which the Adviser or
         any of its properties is subject, which are required to be described
         in the Registration Statement or the Prospectus (or any amendment or
         supplement to either of them) but are not described as required or
         which could reasonably be expected to adversely affect the ability of
         the Adviser to perform its obligations under this Agreement or the
         Investment Advisory Agreement;

                  (vii) The obligations of the Adviser under this Agreement
         and the Investment Advisory Agreement comply in all material respects
         with all applicable provisions of the 1940 Act, the 1940 Act Rules
         and Regulations, the Advisers Act and the Advisers Act Rules and
         Regulations;

                  (viii) The Adviser has full limited liability company power
         and authority, and all necessary governmental authorizations,
         approvals, orders, licenses, certificates, franchises and permits of
         and from all governmental regulatory officials and bodies required
         under Applicable Adviser Law (except where the failure so to have any
         such authorizations, approvals, orders, licenses, certificates,
         franchises or permits, individually or in the aggregate, would not
         have a material adverse effect on the business, properties,
         operations or financial condition of the Adviser and its
         subsidiaries), to own its properties and to conduct its business,
         including specifically its business of acting as investment adviser
         to registered investment companies and as otherwise described in the
         Prospectus, and to perform its obligations under the Investment
         Advisory Agreement;

                  (ix) Such counsel shall also state that such counsel has
         been advised by the Adviser that it is not registered or qualified to
         conduct its business as a foreign corporation in any jurisdiction and
         that it believes there is no such jurisdiction where the nature of
         its properties or the conduct of its business requires such
         registration or qualification and where the failure to register or
         qualify would have a material adverse effect on the operations of the
         Adviser or on the ability of the Adviser to perform its obligations
         under this Agreement or the Investment Advisory Agreement; and

                  (x) Such counsel shall also state that they have
         participated in conferences with officers and employees of the
         Adviser and the Fund, representatives of the independent accountants
         for the Adviser and the Fund and the Underwriters and counsel for the
         Underwriters at which the contents of the Registration Statement and
         the Prospectus and related matters were discussed and, although they
         are not passing upon, and do not assume any responsibility for, the
         accuracy, completeness or fairness of the statements contained in the
         Registration Statement or the Prospectus and have made no independent
         check or verification thereof, on the basis of the foregoing, no
         facts have come to their attention that would have led them to
         believe that the Registration Statement or any amendment or
         supplement thereto, at the time it became effective, contained an
         untrue statement of a material fact or omitted to state any material
         fact required to be stated therein or necessary to make the
         statements contained therein not misleading or that the Prospectus or
         any amendment or supplement thereto, as of its issue date and as of
         the Closing Date, contained or contains an untrue statement of a
         material fact or omitted or omits to state a material fact required
         to be stated therein or necessary to make the statements contained
         therein, in light of the circumstances under which they were made,
         not misleading, except that they express no belief with respect to
         the financial statements, schedules and other financial information
         and statistical data included therein or excluded therefrom or the
         exhibits to the Registration Statement.

         (h) You shall have received on the Closing Date an opinion of Simpson
Thacher & Bartlett LLP, counsel for the Underwriters, dated the Closing Date
and addressed to you, with respect to such matters as you may reasonably
request.

         (i) You shall have received at the time of the execution of this
Agreement, a letter dated such date from PricewaterhouseCoopers LLP, in form
and substance satisfactory to you, containing statements and information to
the effect that:

                  (i) They are independent certified public accountants with
         respect to the Fund within the meaning of the 1933 Act and 1940 Act,
         and the applicable rules and regulations thereunder adopted by the
         Commission;

                  (ii) In their opinion, the financial statements of the Fund
         audited by them and included in the Registration Statement comply as
         to form in all material respects with the applicable accounting
         requirements of the 1933 Act and 1940 Act and the related rules and
         regulations adopted by the Commission;

                  (iii) They will perform the procedures (but not an audit in
         accordance with generally accepted auditing standards) consisting of:

                           (A) Reading the minutes of meetings of the Board of
                  Directors of the Fund as set forth in the minute books
                  through a specified date not more than three business days
                  prior to the date of delivery of such letter;

                           (B) Making inquiries of certain officials of the
                  Fund who have responsibility for financial and accounting
                  matters regarding changes in the capital stock, net assets
                  or long-term liabilities of the Fund as compared with the
                  amounts shown in the latest balance sheet included in the
                  Registration Statement or for the period from the date of
                  the latest income statement included in the Registration
                  Statement to a specified date not more than three business
                  days prior to the delivery of such letter.

                  (iv) The letter shall also state that the information set
         forth under the captions "Summary - the Fund", "Summary--Rating and
         Asset Coverage Requirements", "Financial Highlights", "Series A
         Preferred, Series B Preferred and Series C Auction Rate Preferred
         Stock", "Capitalization", "Portfolio Turnover", "Description of the
         Series D Preferred and Series E Auction Rate Preferred--Asset
         Maintenance Requirements", "Description of Capital Stock and Other
         Securities - Preferred Stock", Management of the Fund - Remuneration
         of Trustees and Officers", Investment Advisory and Administrative
         Arrangements", Portfolio Transactions" and "Portfolio Turnover" which
         is expressed in dollars (or percentages derived from such dollar
         amounts) and has been obtained from accounting records which are
         subject to controls over financial reporting or which has been
         derived directly from such accounting records by analysis or
         computation, is in agreement with such records or computations made
         therefrom, and such other procedures as the Underwriters may request
         and PricewaterhouseCoopers LLP are willing to perform and report
         upon.

         (j) On the Closing Date, you shall have received from
PricewaterhouseCoopers LLP a letter, dated as of the Closing Date, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (i) of this Section 9, except that the specified date referred
to shall be a date not more than three business days prior to Closing Date.

         (k) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use
of the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings for
such purpose or for the purpose of commencing an enforcement action against
the Fund, the Adviser or, with respect to the transactions contemplated by the
Prospectus (or any amendment or supplement thereto) and this Agreement, any
Underwriter, may be pending before or, to the knowledge of the Fund, the
Adviser or any Underwriter or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at or
prior to the Closing Date and that any request for additional information on
the part of the Commission (to be included in the Registration Statement, the
Prospectus or otherwise) be complied with to your satisfaction; (ii) there
shall not have been any change in the capital stock of the Fund nor any
material increase in the short-term or long-term debt of the Fund (other than
in the ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, subsequent to the respective dates
as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise
be stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition (financial
or other), business, prospects, properties, net assets or results of
operations of the Fund or the Adviser; (iv) the Fund shall not have any
liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Fund, other than those
reflected in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them) and other than liabilities for payment for
securities in accordance with the Fund's investment objective and policies;
and (v) all the representations and warranties of the Fund and the Adviser
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of each
of the Fund and the Adviser (or such other officers as are acceptable to you),
to the effect set forth in this Section 9(j) and in Section 9(k) hereof.

         (l) That neither the Fund nor the Adviser shall have failed at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by
it hereunder at or prior to the Closing Date.

         (m) The Fund shall have delivered and you shall have received
evidence satisfactory to you that the Series D Shares are rated at least Aaa
by Moody's and that the Series E Shares are rated at least Aaa by Moody's and
AAA by S&P as of the Closing Date, and there shall not have been given any
notice of any intended or potential downgrading, or of any review for a
potential downgrading, in the rating accorded to the Shares by either Rating
Agency.

         (n) As of the Closing Date and assuming the receipt of the net
proceeds from the sale of the Shares, the asset coverage requirements of the
1940 Act and the Basic Maintenance Amount (as defined in the Articles
Supplementary) will be met.

         (o) The Fund and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.

         All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.

         Any certificate or document signed by any officer of the Fund or the
Adviser and delivered to you or to counsel for the Underwriters, shall be
deemed a representation and warranty by the Fund or the Adviser to each
Underwriter as to the statements made therein.

         10. Expenses. The Fund agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the 1940 Act
Notification, the Prospectus and each amendment or supplement to any of them
(including, without limitation, the filing fees prescribed by the 1933 Act,
the 1940 Act and the Rules and Regulations); (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, each
Prepricing Prospectus, the Prospectus, any sales material and all amendments
or supplements to any of them as may be reasonably requested for use in
connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Shares, including any stamp taxes in connection with the original issuance and
sale of the Shares; (iv) the printing (or reproduction) and delivery of this
Agreement, any dealer agreements, the preliminary and supplemental blue sky
memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Shares; (v) the registration
of the Shares under the Exchange Act and the listing of the Series D Shares on
the NYSE; (vi) the qualification of the Shares for offer and sale under the
state securities or blue sky laws of the several states (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental blue sky memoranda and such registration and
qualification); (vii) fees paid to the Rating Agencies; (viii) the
transportation and other expenses incurred by or on behalf of Fund
representatives in connection with presentations to prospective purchasers of
the Shares; and (ix) the fees and expenses of the Fund's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Fund and of the transfer agent.

         Except as provided in this Section 10, the Underwriters agree to pay
their own costs and expenses of the underwriting, including the fees and
expenses of their counsel.

         11. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Fund, by notifying you, or by you, by notifying the Fund.

         If any one or more of the Underwriters shall fail or refuse to
purchase the Shares which it or they are obligated to purchase hereunder on
the Closing Date, and the aggregate number of the Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is
not more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date, each
non-defaulting Underwriter shall be obligated, severally, in the proportion
which the number of Shares set forth opposite its name in Schedule I hereto
bears to the aggregate number of such Shares set forth opposite the names of
all non-defaulting Underwriters or in such other proportion as you may specify
in accordance with Section 20 of the Master Agreement Among Underwriters of
Salomon Smith Barney Inc., to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase the
Shares which it or they are obligated to purchase on the Closing Date and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date and arrangements satisfactory to you
and the Fund for the purchase of such Shares by one or more non-defaulting
Underwriters or other party or parties approved by you and the Fund are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Fund. In any
such case which does not result in a termination of this Agreement either you
or the Fund shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement. The term "Underwriter"
as used in this Agreement includes, for all purposes of this Agreement, any
party not listed in Schedule I hereto who, with your approval and the approval
of the Fund, purchases Shares which a defaulting Underwriter is obligated, but
fails or refuses, to purchase.

         Any notice under this Section 11 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.

         12. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Fund or the Adviser, by notice to the Fund or the Adviser,
if at any time prior to the Closing Date (i) trading in any Fund's securities
shall have been suspended by the Commission or the NYSE or trading in
securities generally on the NYSE, the American Stock Exchange or the Nasdaq
National Market shall have been suspended or limited or minimum prices shall
have been established on the NYSE, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities, or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on financial markets is such as to make it, in
your judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Fund by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.

         13. Information Furnished by the Underwriters. The statements set
forth in the last paragraph of the cover page and the statements in the first,
third and fourth paragraphs under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred
to in Sections 6(b) and 8 hereof.

         14. Miscellaneous. Except as otherwise provided in Sections 5, 11 and
12 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Fund or the Adviser, at the
office of the Fund at One Corporate Center, Rye, New York 10580-1422,
Attention: Bruce N. Alpert; or (ii) if to you, care of Citigroup Global
Markets Inc., 388 Greenwich Street, New York, New York 10013, Attention:
Manager, Investment Banking Division and to and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Four World Financial Center, North Tower, New York, New
York 10013, Attention: Manager, Investment Banking Division.

         This Agreement has been and is made solely for the benefit of the
several Underwriters, the Fund, the Adviser, their directors and officers, and
the other controlling persons referred to in Section 8 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Shares in his status as such purchaser.

         15. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.

         This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

<PAGE>

         Please confirm that the foregoing correctly sets forth the agreement
among the Fund and the Adviser and the several Underwriters.


                                              Very truly yours,

                                              THE GABELLI EQUITY TRUST INC.


                                              By:_____________________________
                                                  Title:
                                                  Name:


                                              GABELLI FUNDS, LLC


                                              By:_____________________________
                                                  Title:
                                                  Name:


Confirmed as of the date first
above written on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.

CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER
     & SMITH INCORPORATED
GABELLI & COMPANY, INC.

By  CITIGROUP GLOBAL MARKETS INC.


By: _______________________________
      Title:
      Name:


By  MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED


By: _______________________________
      Title:
      Name:
<PAGE>


                                  SCHEDULE I

                         THE GABELLI EQUITY TRUST INC.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
Underwriter                                 Number of Series D Shares        Number of Series E Shares
---------------------------------------------------------------------------------------------------------
<S>                                         <C>                             <C>
Citigroup Global Markets Inc.
---------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce, Fenner &
     Smith, Incorporated
---------------------------------------------------------------------------------------------------------
Gabelli & Company, Inc.
---------------------------------------------------------------------------------------------------------

</TABLE>




</TEXT>
</DOCUMENT>
